WAREHOUSING AND ORGANIZATION GROWTH: IMPLICATIONS FOR MARKETING FIRMS

WAREHOUSING AND ORGANIZATION GROWTH: IMPLICATIONS FOR MARKETING FIRMS

ABSTRACT

The study title warehousing and organizational growth implication for marketing firms (a case study of Dangote flour mills Abuja) is carried out by the researcher with the objectives of working out warehousing is one of the manufacturing of organizational product undertaken. More funds should be released to help provide some facilities that are inadequate to improve the operation of warehousing function despite the roles the management staff played by given orientation to have positive attitude towards warehousing. This is the reason why the researcher needs to encourage the warehousing as a unit that cannot be done without this change of attitude gives moral boost to warehousing workers and should be drilled through training programme on how to operate warehousing equipment to the help improve their efficiency and productivity in handling the equipment. In the organization. The research was carried out through filled and observation all the researcher recommended is tat the management should adopt methods that are cost-effective in order to enhance more profit. Management should change to electronic methods of keeping records as this is faster, saves labour and time.

CHAPTER ONE: INTRODUCTION

1.0     INTRODUCTION

Companies not only need warehouses for their raw materials until when used, but also for receiving finished goods for distribution to consumers. This is because production and consumption cycles rarely match. The storage function helps to smoothen discrepancies between production and quantities desired by the market. “Warehousing in organization exists to provide a continuous flow of raw materials and made-up parts, so that production can proceed at its optimum pace and to remove completed goods and hold then until they are required by customers” (Burton 1980).

On the other hand, every firm or company strives to grow, regardless of its size, as small firms want to get big and the big firms want to get bigger. These have significant implications for the firms. This is the trust of this work.

The economic development of any country is basically determined by the strength of the industrial sector. The components of industrial sector are manufacturing, mining, electricity etc as argued by Ndeobio (1989). Manufacturing constitutes the most dynamic part of the sector. It is the conversion of raw materials from one state to another. Manufacturing organizations are those which work on raw materials extracted from the soil or sea by changing their forms into that form desired by buyers or final users. Critically part of this process is the storage of their raw materials or finished products. The act of storing these goods until they are demanded for, is what is referred to as warehousing.

The importance of warehousing facilities cannot be over-emphasized, as it offers storage facilities to manufacturers, wholesalers, retailers and even the government. It helps in price stabilization. It enhances distribution of goods. It encourages production and economic growth of a country.

1.1     HISTORICAL BACKGROUND OF DANGOTE FLOUR MILL PLC

Dangote Flour Mill Plc commenced operations in 1999, as a division of Dangote Industry Limited following the decision of the industries limited to unbundle its various operations, Dangote Flour Mills Plc was incorporated in January 2006. The restructuring was completed in January 2006, when a Federal High Court Sanctioned a scheme of arrangement where-in all the assets, liabilities and undertakings of the erstwhile flour division of OIC were transferred to Dangote Flour Mills Plc. From an initial installed capacity of 500 metric tonnes per day at its Apapa mill, Dangote Flour has expanded rapidly by opening three other flour mills in Kano (2000), Calabar (201) and Ilorin (2005) in quick succession. Each of the mills started with an installed capacity of 500 metric tonnes per day but three of them were subseqeuently expanded resulting in a total of 4000 metric tonnes per day distributed as follows:

Apapa        -        1000 metric tonnes per day

Kano                    -        1,500 metric tonnes per day

Calabar       -        1,000 metric tonnes per day

Ilorin                    -        500 metric tonnes per day

The expansions according to the company were in response to a growing demand for flour and flour based products in addition to the company’s drive for increase market share – Dangote Flour Mills has grown to become one of the industry leaders within a six year period.

While Dangote Flour is currently largely in the business of flour milling, processing and marketing of branded flour, its operations can be splitted into three (3) main business units: -

a)     Flour milling

b)    Dangote pasta limited

c)     Agro sack limited

Dangote Flour milling business involves flour milling, processing and marketing of branded flour. Its product portfolio comprises bread flour, pasta semolina and wheat offal (bran). The company’s flour milling business operates in an oligopolistic structure compromising over twenty (20) companies, where the top flour companies (flour mills of Nigeria Plc, Northern Nigeria Flour Mills Plc, Honeywell flour mill limited and Dangote Flour Mills Plc) control over 80% of the market in terms of installed capacity, volume of sales and profits. Further investigation reveals that the top two players (flour mills of Nigeria Plc and Dangote Flour) with an installed capacity of approximately 11,000 metric tonnes per day, control over 65% of the market.

1.2     STATEMENT OF PROBLEM

The problem or question which this research work seeks to solve is – how can we enhance effective warehousing and organizational growth to impact positively on firm’s marketing activities? Warehousing has been a neglected area of business activity. It has being considered as an unnecessary expenses. Because of this, management and workers alike have poor attitude towards warehousing, and this has not been going down well with business concerns.

1.3     OBJECTIVES OF THE STUDY

The statement of objectives is to determine the implications of warehousing and organizational growth for marketing firms. The study shows how warehousing enhances effective distribution of raw materials and finished goods. To show how organizational growth has the potential to provide businesses with a myriad of benefits. It as well attempt to show the connectivity between warehousing and organizational growth.

In final analysis, an attempt is made to create concern on the recommendations drawn based on findings.

1.4     STATEMENT OF HYPOTHESIS

Hypothesis is a statement of assumption about relationships which may be true or false. The following are the researcher’s tentative guesses that are still subject to test.

H0: Effective warehousing and organizational growth have no positive influence on marketing activities.

H1: Effective warehousing and organizational growth have positive influence on marketing activities.

1.5     SIGNIFICANCE OF THE STUDY

This study addresses poor warehouse management. Warehouse of many organizations is poorly sited, lacks modern facilities and suffers poor management attention.

It would correct the wrong impression or perception that warehousing is an unnecessary expenses, as it reveals the need for warehousing activities to improve the distribution system of an organization.

This work would be of benefit to company promoters who seek relevant information to improve their warehousing organization.

Government parastatals stand to gain from this work as they seek relevant data to enhance the effectiveness of their stores.

This work also serves as reference base for future researchers.

1.6     SCOPE OF THE STUDY

The study is concerned with warehousing and organization growth. Implication for marketing firms (a case study of Dangote Flour Mills Plc). This work covers the impacts of effective warehousing and the problems of warehousing on organizational growth.

1.7     LIMITATIONS OF THE STUDY

          This research work is limited by the following constraints:

FINANCE: The researcher, being a student was faced with financial difficulties. With the recent partial removal of fuel subsidy and the resultant increase in transport fares in every part of the country, the researcher found it difficult to move around in finding facts needed for lack of fund.

TIME: Time was another factor that affected this research work, because of conflict of time between when the researcher is free and when the respondents are free to attend to the researcher.

RESPONDENTS ATTITUDE: Most of the respondents were initially uncompromising with the researcher as they believed that the study will not be of any benefit to them.

1.8     DEFINITION OF TERMS

Warehousing: - Is the process of storing goods before distribution to retailers or to final consumers.

Warehouse: - According to Oxford Advanced Leaner’s Dictionary of current English is the building for storing goods before distribution to retailers.

Organization: Is defined as any group of two or more people working together in determination to attain a set of goals.

Firm: Any business establishment set up to carry on business activities.

Store: is a general term describing goods, which are held in a warehouse.

Inventory: is a stock of goods that is maintained in anticipation of future demand.

Wholesalers: Are those who buy goods in bulk from producers and break the bulk to retailers or business users.

Retailers: Are those who buy from producers, and resell in smaller quantities to the consumers.

Consumers: Are people who buy goods for immediate consumption or use.

REFERENCES

Burton, J.A. (1980). Effective Warehousing. (2^nd Edition). London: Doble and Brendon Ltd. Page 1 – 7.

Kotler, P. (2005), Marketing Management (6^th edition) London: Macmillan Press. Page 120.

Kotler, P., Keller, K. L. (2009). Marketing Management. (13 edition). New Jersey: Pearson Prentice Hall. Pages 482 and 498.

Warman, J. (1980). Warehouse Management. London: Fakeham Press Ltd. Page 5.

CHAPTER TWO

LITERATURE REVIEW

2.0     INTRODUCTION

The role of warehousing in manufacturing organizations has been established by many scholars. This chapter attempts to review the various expects on the important roles played by warehousing in business organizations for the purpose of in-depth analysis that will be undertaken in the following topics.

2.1     CONCEPTUAL FRAMEWORK

According to Burton 1980, “Warehousing involves who plan the total operation, those who provide the money to pay for it, those who make or provide the items it holds, those who use its services, those concerned with the movement and distribution of stores and those who sell products, parts or services which use stores, quite apart from the stores and clerical staff of the warehousing organization itself. “The warehousing organization exists to bridge the gap between the economic methods of production and the need of the consumer”.

According to Kotler and Keller (2009), “warehousing is the process of storing finished goods until they are sold”. Warehousing is the most typical storage for merchandise. Warehousing is closely linked with distribution.

According to Micbach, Mastson and White and McGinnis etal (1971, 1982, and 1983) respectively review the operations research and material handling literature. They conclude that important gaps in the research fields exists and that most research seemed to concentrate on rather limited problems.

According to Ashayeri and Gelders review the literature concerning warehousing design and concluded that a pure analytical approach as  well as an approach that solely uses simulations will in general not lead to a practical general design method. They suggest that a combination of two approach may lead to a good design method.

According to Ashayeri and Geotschal clax provide a step-wise general design procedure.

According to Yoon and Sharp suggest an elaborate conceptual procedure for the design of an order pick system.

According to Frazelle and Hackman the provide an empirical study concerning the evaluation of warehouses by means of bench marking.

According to Gray etal also propose a hierarchical design method and describe the application of their method by an examples design.

2.2     TYPES OF WAREHOUSES   

In order to meet their requirement various types of warehouses came into existence which may be classified as follows.

1.     PRIVATE WAREHOUSES: The warehouse which are owned and managed by the manufacturers or traders to store, exclusively their own stock of goods are known as private warehouses. Generally these warehouses are constructed by the farmers near their fields, by wholesalers and retailers near their business centres and by manufacturers near their factories. The design and the facilities provided therein are according to the nature of product to be stored.

2.     PUBLIC WAREHOSUES: The warehouse which are run to store goods of the general public are known as public warehouses. Any one can store his goods in these warehouses on payment of cents. An individual, a partnership firm or a company may own these warehouses. To start such warehouses a license from the government is required. The government also regulate the functions and operations of these warehouses. Mostly those warehouses are used by manufacturers, wholesalers, exporters, importers, government agencies etc.

3.     GOVERNMENT WAREHOUSES: These warehouses are owned, managed and controlled by central or state governments or public corporations or local authorities. Both government and private enterprises may use these warehouses to store their goods. Central warehousing corporation of India, state warehousing corporation and food corporation of India are examples of agencies maintaining government warehouses.

4.     BONDED WAREHOUSES: These warehouses are owned, managed and controlled by government as well as private agencies. Private bonded warehouses have to obtain license from the government. Bonded warehouses are used to store imported goods for which import duty is yet to be paid. In case of imported goods the importer are not allowed to take away the goods from the ports till such duty is paid. These warehouses are generally owned by dock authorities and found near the port.

5.     CO-OPERATION WAREHOUSES: These warehouse owned, managed and controlled by co-operative societies. They provide warehousing facilities at the most economical rates to the members of their society.

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